Consultation Paper: SEBI’s New “GARUDA” Proposal Could Change How Fast AIFs Launch Schemes
SEBI has released a consultation paper proposing a major operational shift for Alternative Investment Funds (AIFs) through the new “GARUDA” (Green-Channel: AIF Rollout Upon Document Acknowledgement) mechanism.
The objective is simple:
➡️ reduce launch timelines,
➡️ rely more on manager accountability, and
➡️ accelerate capital deployment across the AIF ecosystem.
Key Proposed Changes
1. Faster Launch for Regular AIF Schemes
Currently, AIF schemes are typically launched 30 days after filing the Placement Memorandum (PPM) with SEBI through a Merchant Banker.
SEBI now proposes:
Launch of new schemes after 10 working days
First schemes can launch from:
date of SEBI registration, OR
after 10 working days from filing
whichever is later.
2. Major Relaxation for Accredited Investor (AI) Only Schemes
For AI-only schemes, SEBI proposes:
No mandatory Merchant Banker filing
PPM can be filed directly by the AIF Manager
Merchant Banker Due Diligence Certificate replaced with:
CEO undertaking
Compliance Officer undertaking
Immediate scheme launch upon filing.
This is a significant move toward a lighter-touch regulatory framework for sophisticated investors.
3. Angel Funds Also Get Easier Launch Path
Angel Funds may also receive:
Direct filing with SEBI
Removal of Merchant Banker DD certificate requirement
Immediate circulation of PPM for fundraising after registration.
Why This Matters
India’s AIF industry has scaled rapidly:
AIF count grew from 732 (2021) to 1849 (2026)
Commitments reached ₹15.74 lakh crore
Net investments crossed ₹6.45 lakh crore.
SEBI is effectively acknowledging that:
the ecosystem has matured,
Merchant Bankers have built operational expertise,
and Accredited Investors can evaluate risks independently.
The regulator is shifting from:
“pre-approval heavy scrutiny”
to
“post-facto risk-based supervision.”
Bigger Industry Signal
The consultation paper also hints at a broader long-term direction:
future AIF ecosystems becoming increasingly AI-only (Accredited Investor focused).
That could eventually reshape:
fundraising structures,
onboarding workflows,
compliance architecture,
and investor qualification processes across the industry.
SEBI has invited public comments on the proposals until June 1, 2026.